Why Does the World Bank Keep on Funding Climate Change?

As activists in industrialized countries work tirelessly to eliminate coal plants and other major contributors to climate change, they risk seeing theirwork undone by new fossil fuel projects in the developing world. Thetemptation for developing nations to turn to cheap coal and oil for fuel makes it all the more important for countries like the US to lead byexample and replace their own dirty power plants with clean energy—butprojects in the developing world like the Kusile and Medupi Coal Plants in South Africa should raise concerns for people all over the planet.And that fact that the World Bank is using taxpayer money to fund manyof these projects rightly has many global citizens seeing red.

For years the World Bank has funded energy projects that causeenvironmental degradation in developing countries. Recently theinstitution’s support for coal plants and other large polluters hasdrawn criticism in the US and Europe thanks to increased concerns aboutclimate change. Yet the World Bank has gone ahead and approved fundingfor many of these controversial projects. The justification? The WorldBank maintains that while addressing climate change is important, it has a duty to help the world’s poor gain access to cheap electricity.

This argument might prove persuasive if it could be demonstrated that coal and oil projects actually help the poor. But in fact a repot by Oil Change International—and the World Bank’s own analyses—clearly show fossil fuel projects fundedby the bank have done little or nothing to improve energy access for the poor. According to Oil Change International, the main beneficiaries ofsuch projects have been big business and heavy industry, not poorcommunities struggling to obtain access to energy.

The World Bank’s own studies do not contradict this view: in fact theWorld Bank Group was unable to find a single recent coal or oil projectthat helped decrease energy poverty. The story of the Medupi Coal Plantserves as a good case study to show who actually benefits from largefossil fuel projects. This 4,800 megawatt coal plant, which the WorldBank voted to fund last spring, was designed mainly to provideelectricity for South Africa’s energy-guzzling mining industry. Theexpense of building the plant will actually mean electricity ratestriple for nearby communities, and the project was strongly opposed bylocal South Africans.

Yet mainstream media accounts continued to quote World Bank supportersclaiming such projects are necessary to help the poor. In the context of the Medupi case, such assertions aren’t just wrong, they’renonsensical. The Medupi Plant will hurt South Africa’s poor more than it will help them, and meanwhile poor communities are poised to sufferdisproportionately from the coming effects of climate change.

So what’s to be done? First of all, the mainstream media should stopportraying funding for fossil fuel projects as a necessary evil thatbenefits the poor. Second, the World Bank should follow Oil Change International’s recommendation and put an immediate hold on funding for coal and oil projects thatdon’t clearly improve access to energy. Third, the World Bank shouldshift from funding construction of centralized power plants that mainlyserve the needs of big business, to supporting smaller scale renewableenergy that directly serves the needs of the poor. For far too long, the World Bank has funded the worst contributors to climate change withoutdemonstrating any real benefit for local communities. It’s time to turnover a new leaf in this international lending institution’s dirty andcarbon-intensive history.

Photo credit: XstrataNick Engelfried is a freelance writer on climate and energy issues,and works with campuses and communities in the Pacific Northwest toreduce the causes of climate change.

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